No building stands yet on Elk Run property; yet interchange is on schedule

One thing the interminably delayed Elk Run biotech/real estate development in southeastern Minnesota demands is patience.

And that’s exactly what the Minnesota Department of Transportation has displayed in great abundance. Last week, even though no building stands on the proposed Elk Run bioscience park, MnDOT gave the green signal to a contractor to go ahead on constructing a portion of the Elk Run interchange on Highway 52.

For those who don’t know, Elk Run is a much-touted real estate development in Pine Island, some 15 miles north of Rochester, home to the Mayo Clinic. The project brought California developer Tower Investments into partnership with Steven Burrill, a San Francisco venture capitalist and biotech observer. The goal was to create a master-planned community in the sprawling 2,000 acres-plus land, which would include a 200- to 250-acre bioscience park.

All proclaimed that the development would bring hundreds of jobs immediately and thousands over the long-term. It only boosted the project’s credibility when, in the middle of the recession in early 2009, Burrill announced that he was going to raise a $1 billion fund by the end of the year for Elk Run. Job creation and the Tower-Burrill partnership were two big reasons for MnDOT selecting Pine Island for an interchange — an interchange in that area was always planned, but Tower’s vision for Elk Run expedited it.

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However, the fund has yet to materialize. In a latest media report, Burrill says he has been “refilling our tank” and is nearly ready to invest in Elk Run and throughout Minnesota. No other details were offered. What this means is a mystery given that in late September, Burrill had said he had a firm commitment for $1 billion from a “foreign investor.”

Just as Burrill has been inscrutable, so has Tower and its local project manager Geoffrey Griffin vis-a-vis their construction time line for the first building on Elk Run.

First, under duress from MnDOT, Tower and Griffin promised construction on the first building by early September, then by October and then by March of this year — and that was after years of delay likely caused by the 2008 recession that hit commercial real estate especially hard.

My sources joke that the only structure with four vertical walls and a rooftop that has ever stood on the Elk Run property is a blue Porta-Potty.

But even as Tower has missed each self-imposed deadline, MnDOT has marched full-steam ahead — first issuing a request for proposals for the interchange, then choosing the lowest bidder and now issuing a notice to proceed. The go-ahead came on April 6 roughly three weeks after its latest request regarding Elk Run went largely unfulfilled.

On March 15 MnDOT sent a letter to Abraham Algadi, Pine Island’s city administrator, saying that before it issues the notice to proceed to Shafer Contracting Co., it requires three things from the city: a formal city council resolution recommending MnDOT issue the notice, a job-creation plan from the city in case the Tower-Burrill fund fails to materialize and finally, an updated construction schedule from Tower.

Of the three demands, only the first appears to have been met. But MnDOT issued the notice early April anyway.

Terry Ward, MnDOT’s project manager in Rochester, clarified via email that the notice to proceed was broken into two pieces so that the Olmsted County portion of the interchange would move forward now. But the go-ahead for the Pine Island frontage roads would follow once Pine Island and Tower provided answers to the other two MnDOT queries.

When I asked what would happen if Burrill’s fund did not materialize and Pine Island wasn’t able to provide a new job-creation plan, Ward simply said “We’ll all have to wait and see.” That has been the response every single time Tower has failed to deliver and MnDOT has chosen to move forward.

The Elk Run interchange is a $40 million to $45 million taxpayer-funded project. So I have to wonder whether MnDOT’s infinite patience and its ability to accommodate Tower despite its repeatedly unmet goals, is severely hurting Minnesotans. The last time I checked, Tower was delinquent on property taxes payable to Olmsted County and Pine Island.